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May 3, 2020 - The Ben Shapiro Show
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Amity Shlaes | The Ben Shapiro Show Sunday Special Ep. 93
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Guaranteed income tends to break up families.
It makes it easier to be a single, autonomous adult.
With a guaranteed income, you don't have to stay together.
Families need to depend on one another in order to be strong.
While Bernie Sanders might be out of the race, his socialist policies and ideas remain.
A Gallup poll shows that 43% of Americans believe some form of socialism would be a good thing, compared to only 25% in 1942.
Today, more Americans associate socialism with social equality than government control.
Back in 1964, in the middle of the Cold War, President Lyndon Baines Johnson, LBJ, created what's called the Great Society, and put into place many of the social welfare programs we have today, including Medicare, Medicaid, educational reform, sparking the beginning of the wave of social democracy we see today.
With the economy currently in the biggest collapse since the Great Depression, we should now be looking back at what worked, what didn't, and how we rebuild the economy.
Amity Shlaes is a renowned historian who has spent her career studying the effects of the Great Depression.
Over the years, she's written for Everyone, Wall Street Journal, Bloomberg, Forbes, National Review.
She serves as chair of the board of the Calvin Coolidge Presidential Foundation, and she's the author of four New York Times bestsellers.
Her latest, Great Society, A New History, is more relevant than ever.
She offers new insights into why the social programs of the 1960s did more harm than good, and what challenges await us if we continue down this path.
Today, we'll talk about how the best parts of the great society are the ones that cost the least amount of money, how the nation's economic success starts with what we do in our own families, and what to expect when the government plays God.
Hey, hey, and welcome to the show.
This is The Ben Shapiro Show, Sunday special.
This week, we're joined by Amity Shlave.
And just a reminder, we'll be doing some bonus questions with our guests.
The only way to get access to that part of the conversation is to become a subscriber.
So head on over to dailywire.com, become a subscriber.
You'll have access to all of the full conversations with every single one of our awesome guests.
Amity, thanks so much for stopping by.
Thank you for having me.
One of the things I've been talking about a lot on my show and in my writings is that there are sort of two versions of American history that have now come to be taught.
One is the more traditional version of American history, that America was founded on eternally good and true principles and the Declaration of Independence embodied in the Constitution of the United States.
Not perfected at the time, obviously we didn't live up to those principles.
The Civil War helps us draw a lot closer to those principles.
The Civil Rights Movement draws us even closer.
But that America was founded on good principles and we've been moving toward fulfillment of those principles.
And then there's an alternative history that's been put forth that suggests that America is eternally rotten, terrible, founded on racism, sexism, bigotry, homophobia, that the only good points in American history are essentially large government intrusions into the life of Americans, the 1930s and the 1960s specifically, areas that you've written a lot about.
So, which of these two versions of history, in your view, is more accurate?
And why do you think that there is this bifurcation?
The former is more accurate.
It's a better country than most other countries.
We should be proud of it and sustain it.
But part of it is the reason poor economics is used to assail the private sector, the companies, in the 1930s or the 1960s.
So the standard history of the Great Depression, for example, is that capitalism failed.
The evidence suggests it didn't.
The actual evidence suggests that the government As one economist of the period said, played God.
And when the government played God, the economy suffered by intervening too much, by, you know, sort of elephant in the room chasing you into the corner with his big trunk.
That's what the government was in the 1930s.
It's very clear.
There's also plenty of economic evidence, so I find it particularly puzzling that the left-leaning narrative would be so compelling to people.
For example, what's the kindest thing to sticking to the 1930s you can ever do for anyone?
That thing is to give him a job.
And in the 1930s, the government created jobs here and there through big programs, but the net was unemployment was over 10%, a level we can't even conceive of, the whole time.
Loving people tried to help people they loved and hurt them.
So I want to talk about sort of your history books, because you've written really three that I'm aware of that have made a big impact.
You wrote one on Calvin Coolidge, and then you wrote one on the Great Depression and FDR's policy.
And then you have your brand new book, Great Society, New History.
We'll go through each of those in turn, because I think it's important for people to know about these periods, which are so formative in how we think about history today and economics.
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We're all going to get through it together, and we'll see you on the other side.
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All right, so let's talk about your first book on Calvin Coolidge.
So you write a book on Calvin Coolidge, who's apparently the most boring president of all time.
According to most people, he's rated always very low.
When you have historians rate American presidents, they always put him near the bottom.
Always FDR is very high, LBJ is very high.
Coolidge, they place very low.
Your history of Coolidge suggests that we should be viewing Coolidge precisely the opposite.
The reason this is important, obviously, is because Coolidge is president right before the Great Depression and is very hands-off in terms of his economic policies.
So what do people not understand about Coolidge?
Well, first of all, ranking presidents shouldn't be a zero-sum game.
And people like to rank in baseball.
If they have a high person, they want a low person because they want it to be zero-sum, right?
That's not useful for presidents, really, although it's fun.
So if you want FDR to be high, which is where the premise starts, I want Roosevelt, a loving intervener, to be high.
Coolidge was temperamentally, and in terms of policy, opposite to FDR, so ergo Coolidge has to be low, and they put him very, very low.
People tend to like a strong man or a great man, depending on the phrase.
You know the word great is always associated with the presidency.
Coolidge said it's not a good idea for the president to be a great man.
In fact, he said it was a comfort to the president and a safety for the people when the president is aware he's just a man.
Oh, that's very, very different.
And that model goes straight back to George Washington, who chose not to stay in office forever and wrote his famous farewell address about how the country needs to move on.
And that's very important to us.
Our government is important.
It's more important than any individual.
We don't want presidents to turn into dictators or have dictatorial power.
I thought this was fantastic.
The economic Record of Coolidge is similarly trashed because if you believe in intervention, FDR, then how can you like non-intervention?
But people get all tangled up because it's very hard to attack Coolidge.
For example, sometimes you'll hear attacks on Coolidge that his interest rates were too low and that caused a bubble.
What were his interest rates?
His interest rates were hundreds of basis points higher than our interest rates.
So if he was loose, what are we now?
He and his Fed, right?
He was catastrophically loose.
Well, we're apocalyptically loose then, and we're going to have 100% inflation and hyperinflation by the same argument that usually progressives make against Coolidge, which is sort of the great Gatsby argument.
If you know from popular culture, well, it was all a lie in a champagne bubble, and the market went too high, and he goosed the market too high.
He didn't.
Actually, Coolidge didn't comment much on the market.
He was trained by Andrew Mellon, a very interesting Treasury Secretary, not to panic the market because uncertainty is bad in econ.
So you make yourself very still so you don't scare the elephant.
And that's just good sense.
So he didn't ever say, and the stock market is way too high and it's dangerous.
Because he felt that itself was dangerous.
But he also believed the White House should stay away from the stock market.
Remember, in the 20s, there was no Securities and Exchange Commission.
There was no serious national regulation, really, of the stock market.
It was, well, the New York had laws, right?
It's different if that's where the stock exchange was.
Or Massachusetts had laws, the Ponzi scheme.
Was prosecuted in Massachusetts, not by the federal government so much.
These are all relative, but anyway, Coolidge thought, well, if the market falls, it will happen as has had happened so many times in my lifetime.
It will fall and people will learn that maybe stocks sometimes go too high and they shouldn't have all their money in stocks.
That was the net of it.
That's what had happened before, and every time before, well, the recovery had come fairly fast.
There was a Great Depression in the early 20s that Jim Grant has written a remarkable book about called The Forgotten Depression.
It was really deep.
Unemployment in some places was 15%.
We would notice that.
But it was so short that we forgot it.
And that was what was the economic policy, the government response to this period.
Depression seems to be coming, or we have inflation.
Let's raise interest rates by hundreds of basis points.
Oh, that's counterintuitive.
And let's cut government, which is opposite to what we would do now.
Now we would spend a lot in government to fight off a recession.
The reaction was what technically is called pro-cyclical.
That is, we made it worse, sort of, but that also made it very short.
That was the standard response insofar as there was a response to downturns.
Then, when we get to the Great Depression, where Coolidge wasn't managing, rather Herbert Hoover and FDR were, they took the opposite position.
They said, let's wade in, let's reorganize the economy, let's berate business, a lot of things that had never happened before.
Let's insist that the labor price be high because that will stimulate demand.
Very new idea at the time.
And all these factors contributed to, along with monetary, to launching the Great Depression and then sustaining it.
So there's not a lot of, you know, I'll say one more thing, in the great Gatsby image, it was all fake, right?
It was just shiny dresses and champagne bubbles.
And there was no real growth.
But the reality of the 20s was there was incredibly solid growth.
Even at Harvard HBS now, at Harvard Business School, right this set, they are studying the patent rates of the 1920s because they were so astronomical.
A lot of ideas, including pre-television that we consider 30s or 40s ideas, were thought up in the happy 20s.
That's all suppressed, all that memory, because of the desire for a narrative that blames Coolidge, blames market, and elevates government.
What does that say about the study of history?
Because when you look at historians, very often what they do is they tend to take presidents toward whom they are favorable in terms of politics, and then contrast them with other presidents, very often dishonestly.
So instead of contrasting Coolidge with, say, Wilson, which would be more of a contemporaneous Comparison, given the fact that Wilson was, by the time he was out of office, deeply unpopular leading to Harding's election, given the fact that Wilson had presided over an unpopular war, that his economy had started to fall into complete tailspin by 1919-1920, that the reaction to that is the election of Republicans who then lead basically a decade of astronomical growth.
Instead of contrasting Coolidge with Wilson, instead what they do is they contrast Coolidge, who was not around during the Depression, didn't handle the Depression, Yeah, Hoover's a bit like Mitt Romney or his father, George Romney.
so that they can falsely contrast Hoover with FDR, when in reality, Hoover was actually implementing policies that looked almost precisely like what FDR did, except FDR just deepened it a little bit.
Yeah, Hoover's a bit like Mitt Romney or his father, George Romney.
He was a can-do man who liked to take charge, and he meant well, and he was a community man, but he was wrong.
I don't understand the whole thing.
I do understand that since you and I have grown up, the history of books have gotten worse, so it's very hard to find the correct history.
And I do understand the desire.
I mean, it's very, very important for young people to rebel against the mono line and check it out for themselves.
They don't have to believe you or me.
They can go look at the record.
If the 20s saw GDP grow fast, if one remarkable thing Coolidge did, for example, was he actually cut the budget.
When we talk about cutting the budget, we mean reducing the rate of growth of the budget.
That's part of our lying, right, to ourselves.
He actually literally cut it, nominal and real.
He actually, it was a lowered data point when he left after being in office 67 months.
That's very important for right now because sooner or later we're going to need a president who can cut the government and join Congress and that.
Here we have one in Coolidge.
And I think just precisely because he was so good, he is intentionally obscured.
I don't mean to be One should be paranoid, but one should be unrelenting in the pursuit of the reality of the event.
The real reality of the 1930s is the Great Depression was great because of that God playing.
I remember when I was writing Forgotten Man, which is the 30s book, I came across an economist.
He wasn't a weird Austrian unheard of economist.
He was the chief economist of Chase Bank.
And yes, he was actually kind of Austrian in modern language, but at the time that was mainstream.
By the way, the kind of economics you and I are now speaking was the economics of the United States up till about 1948.
So, and Benjamin Anderson of the Chase Bank wrote in the Chase newsletter, government shouldn't play God.
That causes economic uncertainty.
Market freezes when government is playing God with lots of random decisions.
So true, so predictable, so understandable.
We never learned this.
It's interesting too, Ben, I will say.
Once I had discovered Benjamin Anderson, the chief economist of Chase Bank, saying all the things I thought might be true.
I felt better with my book, but most Americans had not heard of Anderson.
Then one time I talked to a free market advisor of President Putin.
This is in the day when President Putin had those advisors.
It was Andrei Illarionov is his name.
He's now at Cato.
But anyway, at that time, his email was advisor at Kremlin.gov or something cool like that.
Advisor.
I was like, oh, wow.
And he said, Amity, Benjamin Anderson, Anderson, Anderson, Anderson.
He's the greatest.
They knew all about Benjamin Anderson in the free market club of Moscow or Leningrad, but they didn't know Here, that's how much our education was obscured, that in a communist country, a high economist could know more about the breadth of our history and our economic analysis than we get at our institutions here.
Let's move on to The Forgotten Man, because obviously we're talking about that period.
It is a stunning book, particularly because it takes the Wilsonian conceit that you're going to have the best men at the top of government, the bureaucrats at the top of government, who know more than the rest of the market combined and can implement policies that will somehow even out the economy for everyone else.
And you really see the ugly results of that in FDR and his cabinet and his brain trust.
Because, I mean, my goodness, when you talk at the beginning of the book, As I recall, about the manipulation of gold rates.
I mean, it's astonishing stuff to realize that American national policy was being set based on FDR's lucky numbers.
Well, that's right.
This is all about arbitrariness versus rule of law.
So if you have a bunch of rules, even if they're imperfect, They might be better to follow than have one random leader, however charismatic.
Because we want markets, we don't want just tribal kingdom.
It's sort of a choice like that.
We want to be able to operate with relative confidence in markets.
The market doesn't have to be perfect, it just has to be not too bad.
As Adam Smith said, you need easy money, easy taxes, is what I meant.
Not too bad.
Not too bad situation, and then the economy will grow like crazy.
You don't need a perfect situation.
So that's what we needed and that's what they took away.
Roosevelt had no understanding of that.
He was an arbitrary guy.
He liked to be arbitrary.
He was very charming.
It goes with the territory.
And what happened specifically with gold, what you're referring to, is they couldn't figure out about where gold fit into the Great Depression.
We did have a contraction, a deflationary contraction.
Okay, that was a problem.
So we went off the gold standard, and he wanted to reflate.
So we started, let's see, to buy gold.
You know, he was just like you and me.
He was talking it through his head.
He said, well, I will set the price of gold and buy it here.
But he didn't understand that gold no longer mattered because he had gone off the gold standard.
It didn't have the magic it would have had, buying and selling gold before he went off the gold standard.
So he was very confused and very random.
And what's wonderful in that story is that Henry Morgenthau was his treasury secretary and was kind of the fool on the stage, as in Shakespeare, who is a fool but also speaks truth in spite of himself.
Henry Morgenthau, the future treasury secretary, went home and wrote in his diary, Roosevelt is picking the gold price because he has certain lucky numbers, and he's using those lucky numbers to pick the gold price.
Let it go up 21 cents.
Why, Mr. President?
Because 7 times 3 is 21, and 7 is a lucky number, or 3 is Morgan that went home and wrote in his diary.
If anyone knew how the United States set the gold price, they would be frightened.
And markets were frightened.
And that contributed to the duration of the Great Depression.
And that happened over and over again in many areas.
The government intruded, scared people like a dictator.
People froze.
We had what we call capital strike or business strike.
One of the most famous stories in the book.
There are two stories in the book that are worth recalling.
One was out here in the West.
We had a government farm called Casa Grande, Arizona, which is kind of outside Tucson now.
Actually, outside Phoenix, sorry.
Somewhere in between the two.
And Casa Grande was a real animal farm.
The government provided everything.
The people were supposed to work collectively and be happy, except it was humans.
They had to share the tractor, and in exchange they got really nice homes.
These were people who would have been in, you know, John Steinbeck otherwise, who didn't have enough food, who didn't have combs, who didn't have shoes necessarily, very hard times.
And what they discovered was that no matter how much they gave the people, including a really nice community house, a really nice chicken coop with a rare government chicken in it that would be more productive, more eggs, the people didn't like it.
They said, I want my own tractor.
I don't want to collectively farm for a wage, which is what Casa Grande was.
I want to own my farm and get profits.
And the people eventually went away.
That's because a big government program tends to go against human nature.
That's what the Casa Grande Animal Farm Farm experiment showed.
The other story in the book that people often refer to was a small chicken butcher in Brooklyn, and his case went to the Supreme Court.
That's A.L.A.
Schechter Poultry v. N.I.R.A.
And the-- or an IRA.
And the chicken people had a little kosher wholesale butcher outfit, right?
The slaughterhouse.
And the government came with the New Deal rules and told them what to do.
And the New Deal rules didn't make sense to the little chicken people and kind of went against their custom as well.
So, for example, under the New Deal rule, for reasons that are just absurd, people weren't allowed to pick their chicken any longer.
They had to take the chicken that came out of the coop when the butcher pulled it out.
Well, they want to pick their chicken.
This is in the era before antibiotics.
They want to know they have a healthy chicken.
That's all many, many ethnicities, like fresh poultry, and they're right.
They want to see the happy, healthy fowl before it's slaughtered, and they know their dinner will be great.
So this went to court.
The Schechter brothers were charged with many, many fines.
Then they could go to jail, felony basically.
And it went to the Supreme Court.
And the Supreme Court found for the chicken butchers and said, government can't reach this far.
This is too much.
It abuses delegation.
It abuses the Commerce Clause and so on.
And you know what?
The stock market went up after the Schechter case was resolved siding with the little chicken butchers, the Schechters.
And that, I think, was because the market saw that there was a limit to what even new dealers could do in the US economy.
So these are very interesting stories about arrogance of government.
Essentially, arrogance of government hurts jobs.
Arrogance of government leads to Outrageous mistakes.
The mistakes of the New Deal.
Arrogance of government can be avoided as well.
There was a study recently that came out from UCLA.
A couple of professors there found that FDR's policies had lengthened the Great Depression by at least eight years.
That the deep government interventionism had scared away capital.
That the attempts to prop up wage rates by lowering production in particular areas had prevented people from getting food.
That the Tyranny from above of forcing businesses to adhere to laws with like literally they would they would tell people that they had to put symbols in their windows if they were adhering to government policy that none of this had had a particularly salutary effect on the American economy and yet the history that I was taught when I was in social studies in in middle school was that FDR had saved the country during the Great Depression that if it had not been for FDR and his interventionism if it had not been for the New Deal and and all various programs
associated with it, that America would have collapsed into complete dust and or tyranny.
Complete dust and or tyranny.
Well, one thing, you just look at the stock market today, people think a never rising Dow is their birthright.
Dow's going to go up because we're great, right?
Well, the Dow did not come back until the 50s from its pre-depression level.
And that was not because pre-depression was that much too high.
It was because people didn't believe in capitalism anymore.
Government had depressed them.
And the Dow of the 60s, just to get later, Everyone counted on it getting past $1,000.
It didn't get past $1,000 until Ronald Reagan.
Imagine if we had to wait a decade plus more to get to $30,000.
Well, our children and friends would be mightily disappointed, including all the people who have pensions in the stock market, including teachers and TIAA-CREF.
Right.
So the evidence is definitely there.
You're so right.
I think one reason with Roosevelt is he was on the right side of World War Two.
War trumps econ.
It's a sad little story for economists and for the economy, but war trumps econ.
He led us in rescuing Europe.
So people are simple minded.
They don't want to hurt Roosevelt for his little domestic errors.
Say my mother, who's now gone.
Unfortunately, she loved Roosevelt because of what he did in the war.
So she was willing to forgive that other stuff.
It was too complicated.
That's not useful for us if we're operating in the real economy or if we're setting policy now, to out of sentimental affection for a war leader, ignore economic evidence that hurt our grandparents or great-grandparents or parents.
The second thing is teachers like government, especially when they're in unions.
I like government too.
I admire it, but it's so often wrong.
Third is, you know, it was said in the 60s, there was an Italian writer Gramsci, the philosopher, and also in Germany, that when the left didn't win, In the great 60s upheaval, they would copy Mao and do a long march.
But in America, the long march would be a long march through the institutions.
They would get tenure.
They would become judges.
And that long march did happen.
So now if you go to school and you find teachers, almost all of them are going to be more progressive.
They hang together.
They're progressive.
And they reinforce each other.
And they write the books.
I also would say, I don't hate it, but I think it's wrong for the College Board to have such a monopoly on all the economic testing culture, that then a new testing culture needs to be created.
There's a test for classical education now I'm very interested in, because if to get a five on the AP to get in college, you need to believe that Franklin Roosevelt Saved America in the Great Depression, you're going to believe that.
And we're closer to East Europe than is comfortable for us.
In fact, there's a diversity of evidence in all these areas, Ben, and the econ is pretty unmistakable.
Freer is slightly better for the United States.
Inflation is caused by government when it's too big.
We haven't had inflation yet this time.
That doesn't mean we never will.
Our freeways will be completely impaired should the interest rate go up.
Well, one day the interest rate will go up.
The other factor I think that has an impact is the revisionism that takes place between World War II and the 60s, which is this idea that FDR has put the American economy on new footing, and then after World War II things explode forth because of the new footing of the American economy, when in reality it's pretty fairly evident that the reason that the United States economy leaps forward is because we are literally the only country on earth that has a major industrial power that has not been completely wrecked all the way to the ground.
It turns out that gives you a hell of an advantage in terms of competitive Right, right.
That's very important.
There's a joke about the 50s.
They say Democrats go back to the 1950s in their minds because they want to work there.
Very well-paid decade for also unskilled workers.
Republicans go back to the 50s because they want to live there.
Because this war conservative is very interesting.
But the absolute truth is we could raise wages as much as we liked in the 50s because Asia was not a threat.
Europe was.
What do we consider Europe?
A potential customer for our product.
That is what the Marshall Plan was for.
Not so they could start their own factories.
And in the explanation often it was so Europe would have enough money to buy our stuff.
That's how it was sold sort of as a Commerce Department venture.
In the United States.
So that's one thing.
Another thing is like think about when you're in college and your junior year, your college wins the pennant.
And how much you love the coach and the team.
And if you're on the team, that stays with you forever, right?
There are studies that suggest that if your college won junior year, you are going to be a better donor than anyone else at your college, all things being able.
Forever.
Because the high of it can never be replaced forever.
Well, the war, World War II, was an even greater high.
Those people, those soldiers, those vets returning home, associated Roosevelt with the high of their life.
We saved Europe.
How can they stop and quibble about economic policy?
Again, but it's associated with a major high for the U.S.
Norman Podaritz, a great intellectual, said regarding the 60s when he heard about curing poverty that, sure, we could do that.
We won in Europe.
I mean, compared to winning in Europe, isn't curing poverty in the United States a small thing?
And Podaritz said, well, we regarded curing poverty in the United States as a kind of mopping up action.
Not too hard, relative to the other things we do.
If communism can go away in Europe, then we can have socialism here.
Same thing.
People look at what happens overseas and they say, well, I mean, sometimes it's very perverse.
They say, well, if that big thing can happen here, we can do this here.
They draw the wrong lessons sometimes.
Let's talk about Great Society because now we've reached the 60s.
And the fact is that the economy, as you talk about in the book, is booming by the early 60s during the JFK administration.
We have very high rates of GDP growth.
And there is this sort of belief that settles over America that finally we've reached the end point.
That if we just engage in massive government redistributionist schemes and major government involvement, that we can cure poverty once and for all.
And after all, we are in the midst of changing so many of our mores in other areas, some for good and some for ill.
I mean, I'd argue for ill in the sexual revolution, but for great good, obviously, in the civil rights movement.
You talk in Great Society about this notion being pushed by members of government, by union leaders, that we are right on the verge of finally, basically... Yeah, exactly.
Right.
The Great Society is important.
Why?
We spent tens of trillions.
What would happen if we had those tens of trillions?
We could erase the debt.
Imagine if we could get up tomorrow and say there's no more American debt.
We massively misspent when we spent on the Great Society.
The good parts of the Great Society, in my view, weren't the ones that cost so much money, such as the civil rights Act, which came at-- and the Voting Rights Act, which came after it, which basically established or affirmed the most basic rights.
So people-- one in 10 black men in the South voted.
That's wrong.
State of Mississippi, it has to be fixed.
Voting Rights Act.
People couldn't sit down at a lunch counter, that needs to be fixed.
It was fixed.
So those things were not expensive.
They were emotionally expensive and politically charged, but they were not expensive because they were rights of freedom, what's sometimes known as negative rights, which is to say rights about your individual, not that to which you're entitled, which is a positive right.
So those were great.
But then Johnson, who was the president, kind of switched over.
He said, I'm going to build a great society in the classroom, the countryside, the city.
And first he said that was all about opportunity, less expensive.
Then he said it was about what one is owed, very expensive.
And you can mark the shift.
from freedom to entitlement in a speech he gave at Howard University where he said basically it's not enough to free people and give them the opportunities other people have.
That's like putting a lame person at the start line of a race and then of course he's not going to win and you go haha you lost.
That's cruel.
We need to help people all along until they're really ready to compete with others.
That idea went Just absolutely exploded into massive spending in all areas.
It led to affirmative action that we have still with us today, but many other projects, too, that did the opposite of enfranchisement.
They disenfranchised people by chaining them forever to welfare-like programs.
I mentioned food stamps and sometimes people attack that.
There's nothing wrong with a poor family sometimes receiving food stamps.
There's something sick about, for the family mostly, of the family expecting it will always be on food stamps, and its children will, and its grandchildren will, and that's sort of what we've created.
The Great Society basically just Increased and increased commitments for spending made some very interesting legal shifts.
One legal shift was at the beginning of the decade, spending on benefits was more like charity from the federal government.
The law changed through the Yale law professor Charles Reich, through the Supreme Court in a case called Goldberg v. Kelly, where essentially benefits became property, where we got the word entitlement.
You're entitled to it as a patent owner.
is entitled to the rents from his patent, the property from his patent.
That's a weird idea.
Why should people be entitled to payments that cost someone else?
Because when you spend for one person to get entitlement, property, a benefit, you're taking away someone else's property, his money.
He must pay the taxes for this project.
So our property rights hurt or helped.
Charles Reich is very interesting because he also wrote the Greening of America, sort of crazy left-wing manifesto, mixed-up youth manifesto.
But I think his property rights analysis, that welfare is property, was incredibly damaging to our society.
I mean, there's so much in the book that I didn't know, even as somebody who's studied the period, and that's absolutely shocking.
The federal government openly sponsoring people to agitate against the government in order to stump for benefits was one thing that I found absolutely shocking.
Yes, Mayor Yorty of Los Angeles and Mayor Daley of Chicago are both in the book, and I want to let you know, because of my own progressive education and perhaps yours, I never thought Mayor Richard J. Daley, the boss, was such a hero.
I grew up around independent Democrats who really hated him because he ran a machine and it wasn't nice.
My parents grew up in Chicago.
Sort of like Mussolini.
I mean, you know, the snowplows came.
When it snowed, but he wasn't nice and they weren't particularly part of it either because he had, Daly was an Irish machine.
But I grew to like Daly in this book and even Yorty of L.A.
because the mayors had ideas for poverty.
This is the Tocqueville Society of the United States of America where community comes up with ideas and understands very well what's needed in their community, mayors do.
Even when their community is people of a different race.
That can happen, right?
So Mayor Daley had all his poverty ideas in a box and he supported the Democrats.
Kennedy, Johnson, and 64.
And so when Johnson gets up and announces big poverty program, Mayor Dilley says, great, Lyndon, puts all his ideas in the box.
I mean, ties it with a bow, big box, and sends them to Washington.
Here's what you're going to give me money for, programs I've started with my employees.
That is not what the Great Society did.
Instead, Johnson's people, led by Sergeant Shriver, also of Chicago, was they created their own federal poverty office in Chicago.
They tapped their own friends.
And those friends who were picked by the poverty office in our War on Poverty in Chicago were really left wing.
They even gave money to the Blackstone Rangers through the Woodlawn Organization.
So they kind of supported a vigilante protection the way the U.S. government.
government has occasionally done in Medellin, in Colombia, in drug places.
You give guerrillas money so they won't shoot so many people and will become something tamer like a police force, but it's a creepy thing to do.
That's essentially what we did, and Daley could not believe it.
The federal government was giving money to people who wanted him out of office and who were going to cause riots in his city, and sometimes they still could.
And he called up the White House and he said, does President Johnson know he's giving M-O-N-E-Y to subversive people?
So I began in reading the humiliation and frustration of these mayors and reading of that to understand how undermined our towns were to an extent that we still suffer from today.
The mayors just became mendicants who needed money from Washington and Washington always set the terms.
That was a surprise to me.
It's amazing how none of the ideas from the Great Society have ever truly died, like, even gone away.
I mean, what we're watching right now in the 2020 presidential race is the reflection of a great many of those ideas, be it Bernie Sanders or Elizabeth Warren, in even more extreme forms.
I mean, literally, while we were filming this, Bernie Sanders was tweeting out that we ought to have national rent control.
He tweeted that out today.
And the first thing that I flashed to was the Pruitt- IGO.
The IGO Government buildings in your book because I actually tweet out a picture of it for those who missed it because the fact is that the policies that were being pushed by the Johnson administration were these policies of right to housing and therefore we're going to literally knock down entire suburbs and just put up government housing.
It was such a terrible idea that as you talk about in the book, they had to basically knock down all the government buildings because it was such a terrible idea.
And yet that is coming back, and it's coming back stronger than it was maybe in the 60s.
Well, you know, one thing about the old New Republic writers and the progressives of that period is they were quite honest.
And one of them I'm thinking of is Nicholas Van Hoffman.
And he has a story about leading a rent strike.
That is exactly what is under discussion now.
Make the bad landlord, who's a rat-fink profiteer, Be nice and bring down the rent or do something else for us, repair this or that.
And Niklas von Hofmann, this writer, was then a young activist, maybe working for Saul Alinsky.
And he went and there was a meeting with the evil landlord.
And the landlord came and he had a piece of paper.
And he said to his lawyer who was with him, tell them.
It's like science and the lawyer says the landlord is willing to give you angry tenants the property for $1 because he can't afford to maintain it even at the rents you think are too high or whatever he can't hit the business does not make sense to him there's no way even if he wanted to help you he could he's losing money so would you like the property for $1 and if
Nick van Hoffman went home and had a stomachache because his whole premise of left-wing activism over rent control or bad landlords who don't replace light bulbs or get heat was blown away.
The poor little landlord gave up.
He said, you can have the property here.
I'm scared.
You're bothering me.
You're making me feel like a bad man.
Most landlords aren't bad men or good men.
They're somewhere in between, like all humans.
And just the mere economics of it didn't work out.
In the case of Pruitt-Igoe, which was this massive housing project, perhaps the biggest in the United States, tower after tower, the premise was economic growth.
It didn't happen.
They never filled the public housing.
That is, the St.
Louis Housing Authority never got the revenue it thought it would, based on the economy of scale of these towers and massive growth.
It just had too little revenue to pay.
for fixing up these towers.
The tenants were very unhappy.
There were rules for the tenants that basically drove out the fathers because if you weren't dadless, you didn't get a good apartment.
The sons went wild and broke all the windows and made terror cells of the elevators.
And this dreamy utopian public project with rent control became a dystopia.
Hell, so sad.
In fact, one of the interesting things about Pruitt-Igoe, they did eventually blow it up.
It was a shame, a blight of St.
Louis, not a pride, was that there was a Catholic priest named Father Shockley who worked there a long time.
I want to work in public housing.
I want to help poor people.
I'm a progressive.
And he eventually concluded that the best thing he could do for the people at Houdaigo was to move them out into houses of their own and help them buy them.
So this little project, buying little houses, and the people really liked to have their own house.
And they actually knew how to paint their house.
And the dad got to stay.
And it was a miniature but valuable success story.
So to see people replicating this today.
There's also a story about guaranteed income, which is in the news.
Guaranteed income tends to break up families.
The Great Society people, who again were sometimes more honest than we are now, commissioned some studies.
And some of those studies were actually funded by the Great Society to see what happens when you give families guaranteed income.
And one thing it does, obviously, It makes it easier to be a single autonomous adult.
With a guaranteed income, you don't have to stay together, dad or mom.
Families need to depend on one another in order to be strong sometimes.
The dad needs to be the breadwinner, sometimes.
The mom needs to be the breadwinner, but anyway, they need to be together.
And a paid income tends to divide people.
I have money now, I don't need you.
Okay, so let's talk for a second about union strength.
So one of the big things that the Democrats have been pushing, the left has been pushing recently, is the idea that America's economy has not been growing equally because of the decline of American unions.
That if unions were stronger, then they could be pushing in the private sector for more wage gain in the private sector.
The idea is particularly that manufacturing and industry, that those industries have fallen behind, that the lack of union strength has led to all of this.
You talk at length in Great Society about the union contribution to the Great Society, union involvement with the Great Society, and then you also talk about the fact that union states just basically stopped growing and very often fell behind economically.
So what happened with America's unions?
Were they good for America's economy?
Were they bad?
Where do they stand?
They made labor too expensive, and that didn't matter when we had no competition.
When we began to have competition, the unions were indeed very powerful.
They did indeed push up wages, and they made our automobiles uncompetitive.
Just to give an example, let's stick with the United Auto Workers, because I focus a lot on Walter Ruther, the UAW leader, the Detroit auto union leader.
He got so involved in politics and pushing up wages to help his workers that he failed to notice something on the landscape.
That was the freight ship bringing over Toyotas.
The Toyotas docked.
The little Corollas rolled out.
They were ridiculous.
They were small.
They ate our lunch.
Eventually.
You could contract the story.
You know, telescoping.
They ate our lunch.
We didn't notice.
Oh, Americans like Toyotas.
Oh, by the way, they're better made.
Why is that?
They're better made in part Because, and this was new to me really, Ben, when I studied it.
Some people have studied in business school, Japanese assembly line projects, how a Japanese assembly line might differ from an American one.
We were in this Dance.
Worker v. employer.
And it was pretty rough on the American assembly line.
It was not pretty.
When a worker was unhappy with the way something was going, he couldn't stop the assembly line.
It was modern times.
And the unions kind of liked that because they liked to sustain the hostility between the worker and the employer.
That led to angry assembly lines and junkie cars.
In Japan, which we think of as such a rigid society, a worker could push a button and the assembly line would stop if he had an idea that might make the assembly line work better.
And they listened to one another more, which we, you know, in our stereotype, don't think is Japanese, such a hierarchical culture and so on.
The unions there were weak.
So their cars were better than our cars.
And they made more cars per hour Their productivity began to strip us in the 60s as they recovered from World War II.
All of a sudden, Japan had cheaper, better cars, or Germany had cheaper, better cars.
So the idea that a union is great, you can have that illusion if you have no competition.
If you want to go the Donald Trump way, and even farther, and have giant protectionism, which the Democratic Party has to consider as well, then you might, for a time, be able to shut out competition.
But not for long, because people really like those Toyotas.
Yeah, we're seeing this now in negotiations over the USMCA, where the unions really got into the process and now have demanded that a certain number of man-hours going into the making of cars be produced at a certain wage, and that is supposed to hold true in Mexico as well as in the United States.
It seems like a great way of pushing up the cost of vehicles past what Americans are going to be willing to buy in five or ten years.
Right.
I mean, there are two Americans.
One is buying and the one is working.
And, you know, the alternate is education.
All Americans are capable of improving their education or that of their kids.
What if we hadn't done the Great Society, the spending part?
What if we had spent that all on making sure every kid knew algebra and trig?
Imagine what a culture we would have.
One of my favorite characters in the book is one of the civil rights leaders.
His name was Robert Paris Moses.
Robert Paris Moses.
He's not the Robert Moses who built the houses in New York and built the bridges and tunnels.
He was a Stuyvesant alum from the math high school in New York who became a math teacher and then decided he was going to be a civil rights activist, went to the South, grew disillusioned with the Johnson administration, wanted to help black young people, and started, eventually, something called the Algebra Project, which won a MacArthur grant, a genius grant, to teach all poor young people, especially his community, blacks, algebra.
I'm for that.
That's where the energy should have gone.
And by focusing on identity and groups, whether it's labor, race, we misled our own country.
One of the things that happens in the aftermath of the Great Society programs, we have complete economic stagnance, basically from the late 60s all the way through the very early 1980s.
And then there's this sort of pushback, not against the spending programs, but at least against the taxation and the regulation via Ronald Reagan.
You have Bill Clinton basically acquiescing in the idea that the era of big government is over.
And then in the aftermath of 2007-2008, obviously that all goes away.
Obviously the American mentality has shifted.
We are back into big government big time, if we ever left it.
But the truth is, that story, which is told so often by Republicans, is not fully true.
I mean, the fact is that these entitlement programs never really went away.
The Reagan administration spent an enormous amount of money, as did the Bush administration.
So here's the question.
Are we ever going to get past the Great Society or are we doomed to basically ride this train until it runs directly off the rails and we'll be forced into austerity because economics is reality?
Unfortunately, I think we'll be forced into austerity.
There's some new books about austerity.
It's not always that bad.
But of course, it's not great to have it.
It will be hard.
What it is is we're a casualty of our own success.
Nothing is new is the motto of this book.
It's just forgotten.
Nothing is new.
And when you're doing so well, you just assume growth.
Assume the economy.
For a long period, we were able to tell ourselves we could outgrow our problems.
But the way the entitlements are now rigged, they grow with the economy.
And that's technical.
These are formulae.
For example, Social Security.
The richer we are, the better Social Security benefits are going to be.
It's not that I'm two years older than you, you get the same pension as I do from Social Security adjusted for inflation.
That would be fine.
You get more than that.
You get something that rides with the average real wage.
So my younger brother actually gets a better pension than I did, forgetting about inflation.
I think most people just think if we adjust for inflation, that's it.
That would be fine.
But because social security formula have to do with the quality of life, you can never outgrow social security.
It's hard to outgrow Medicare as well.
So this idea, the old idea, let's outgrow it, is a little bit passe.
I had the honor to work with President Bush on an economic growth project.
My main job was to get up self-assigned and say, well, I'm not sure we can outgrow this.
We have to reform it this time, guys.
So yeah, that's the problem.
One of the things about Reagan was he could never bring himself to undo many programs, but we kind of have to forgive him because he was in a rather serious war, which was the Cold War.
Remember, Star Wars was not just a fun idea.
It was created out of desperation, this idea of a shield in space to end the arms race.
And nowadays, when people talk about military spending, if you look at a graph of military spending, it's way down from the past.
One of the ways we mislead people on television is to say, as a share of discretionary spending, defense spending is huge.
Yes, but discretionary spending is a smaller and smaller part of the budget.
So when they start to talk to you about as the share of discretionary, they are misleading you.
Look at the whole budget because all the entitlements are in mandatory and they're bigger and bigger.
They've been bigger for a long time now than defense.
Don't let anyone tell you it's all our troubles are because of defense spending.
Okay, so there's an argument that's been kind of interesting on the right between, I'd say, you know, I'm on one side, I'm much more libertarian when it comes to economics, and there are folks who are sort of in the first things category.
There's a magazine called First Things where they write very often about sort of economics and society, and their argument goes something like this.
In the 1960s, the Democrats came along and wrecked the family structure through government interventionism and social engineering.
And now those institutions have basically been destroyed.
The destruction of those institutions means that there is no way for communities to recover.
And thus we should use the means of government in order to pour money back into communities that have been broken, thanks to government policy in the first place.
There's a call for government interventionism that is designed toward helping dying towns, helping rust belt towns.
You see Tucker Carlson talk about this on his show a lot.
Is that destined to work or is that destined to fail in the same way that all social engineering projects seem to fail?
Evidence suggests that will fail.
In the 1960s already they knew that it was bad to separate families.
Lyndon Johnson knew it and said it.
JFK knew it and said it, so it's already myth that they didn't know that, and yet they managed through their guaranteed income, for example, to disserve the family.
The family is so important in the United States.
Who can fix the family?
Only the family.
Only the community, locally.
And this idea of Tocqueville from above, which is basically, oh, Tocqueville, he understood the American community, let's help the American community from above, usually doesn't work.
Tocqueville has to come from the local town.
And what do you need to give a community so that it can form itself and help itself?
You need to give it space and breathing room.
You need to take the elephant out of the room.
I think that electability is also part of this drive.
It sounds nice, every family gets paid X, another child credit, another Longer paternity leave, whatever that is.
Sounds nice.
Government can't afford it and it doesn't usually work.
It just sounds nice.
So I'm sad to see this direction.
Let's just play mind game and say, oh, let's cut the capital gains rate in the United States to 5% benefit plutocrats.
Or let's triple the child credit.
Which will be better for the family?
Absolutely.
Cutting the capital gains tax.
Because then every dad who had a business would make more money.
Every dad who traded stocks would make more money.
Every mom who traded stocks would make more money.
Every mom who had a business would make more money.
And guess what?
They'd be able to pay for their families and their community.
Let's halt the reduction in the value of the charitable deduction, because there are many ways in which charitable deductions, as wonderful as they are, are limited by the tax code.
Let's halt that and make it even, so a charitable deduction is really valuable, so that when you give charity money, you won't be taxed on that money.
That would be great.
That kind of thing.
So you can make low cap gains.
Not even enhanced, just neutral charity, that it returned to neutrality.
More school choice, not through the federal government, but locally.
You begin to see all the things you want.
Sometimes, you know, communities think it's easier to assign one person, that would be the president, to fixing the family.
It's not like that.
The family has to fix itself, and it can.
We have to acknowledge that.
How do we fix the teaching of history?
So since the beginning of the 20th century with sort of the rise of folks like Charles Beard and then later in that line, you know, 50 years, 60 years down the line, the Howard Zins of the world, there's this rewriting of American history that happens apace in which instead of looking back at history and reading history through its own lens, there's an attempt to read history through the modern lens.
So stuff that we like right now, we look back in history, we identify the seed of that, and that seed becomes good because it has produced this thing that we like.
Right now.
And if we want to change, effectuate it.
Then we look at history through the prism of what change we'd like to see effectuated.
And this is very openly talked about in the 1920s, 1930s by the new historians and the idea of rewriting history with an eye on what sort of social change we'd like to see.
What sort of perspective should historians take when it comes to looking at facts?
Because obviously we all have our own prism when it comes to looking at facts.
You look at the basic evidence.
In our case, we've been talking about the Dow Jones Industrial Average and employment, particularly employment of the poor in the later history.
Well, the evidence is pretty strong.
You're fixing history right here by offering a different point of view or a different set of data.
I have great trust in people to make their own evaluation.
I'm concerned about the way history is taught in schools.
One, it's taught more left than it should be, but two, it's not taught enough.
The predominance of the social sciences, which presume that we can solve things, means the eclipsing of history, which is, as the historian said, chancy.
It doesn't always come out the way the theory would suggest, and there's a wonderful, unterrible, terrifying serendipity in that.
Oh my gosh, something ended up the way it shouldn't.
It almost happened, for example, relating to labor.
Right now we have right-to-work states and non-right-to-work states and non-right-to-work states.
You kind of have to be in the union and there's only one union and the employer kind of has to accept that union and the jobs leave there.
That natural experiment is a very important thing for the United States.
That's how we learned that unions could be counterproductive.
What if we hadn't been allowed to have so-called right-to-work stakes?
Well, that almost happened.
It was on the Democratic Party agenda to end the right-to-work exemption, which was part of Taft-Hartley law.
It just happened that Lyndon Johnson got a little...
tired after the Tet Offensive and so on, that he didn't have time or energy after all the civil rights legislation and Medicare and Medicaid to put through an end to right to work.
So this loophole stayed, so all these states grew and showed us that perhaps unionization is an impediment to growth and employment.
Never would have happened had we just made the whole country non-right to work, which is indeed what some of the candidates are proposing now. - Is there a way to put the genie back in the bottle here?
So the constitutional bargain has been rewritten, broken.
One of the problems with government is obviously that you have discrete beneficiaries and diffuse victims.
With every government policy, it's easy to see the person who gets the check.
It's very difficult to see the millions of people from whom the check came.
Is there any way for Americans to reestablish that constitutional bargain and move back toward a system of negative rights versus positive rights?
Because that's really what both The Forgotten Man and The Great Society are about, is this transition from the actual rights of the American Revolution to this kind of second bill of rights that includes all of these entitlements.
Yes, I do think.
Reagan came up with his name for California when he ran for governor the first time in the 60s, Ronald Reagan.
And remember, he wasn't so known then.
I mean, known in California, known as an actor, but wasn't all going to be automatic to the presidency the way we think of it now.
He said, we have a creative society, not a great society, a creative society.
And if you permit creativity, then you will see recognition.
Through doing a business comes understanding of the importance of markets.
And he really believed that and it was true.
So I believe we live in a super creative society now.
People are doing things they never imagined they could and change is happening at a faster rate than it's ever happened before.
So I do believe through alternate paths of education, whether it's new forms of video, streaming, YouTube, a lot of things you're doing, or through contests, people are managing to educate themselves.
One of the things we do at the Coolidge Foundation, where I am, is provide the education about Calvin Coolidge to high schoolers through economic debate.
If they have to debate the economy, they see that Coolidge had some merit.
So they can make up their own mind.
They argue both sides.
But I really do believe in workarounds and education as important for the future of America.
That sounds tame education.
I really believe in it.
Well, why do you think it is that so many of the sort of economic elites in our society have bought into the nostrums of the great society?
Because you would think that those would be the people who lead the fight against it.
And indeed, throughout your books, you talk about certain entrepreneurs who were leading the fight against this sort of government interventionism and saying, this is not the way I run my business.
This is not the way a business ought to be run.
And yet now, increasingly, what we see is sort of our great business leaders who are speaking out on behalf of government interventionism Who are openly stumping in favor of government interventionism.
Is that just because they're looking for a specific benefit from government or is it because they've been cowed into submission by a politics that declares them malefactors of great wealth if they refuse to if they refuse to kowtow?
Well, there are two questions.
One is economists.
Economists, their problem is they're in a guild.
As opposed to entrepreneurs at the beginning, right?
They're in a guild, they have to please one another.
They prefer to be powerful to being accurate sometimes, right?
So the guild believes, you want the favor of the guild.
In this book, in Great Society, I have the story of Arthur Burns, a really great economist who completely caved, broke his own oaths.
You know, and gave us inflation, even though he was a great scholar of inflation, out of vanity and political politics, because he wanted to be loved by the president.
Businesses, it's a different matter.
When they're publicly traded, they're almost part of government already.
Warning, do not go public with your business, because then you are heavily regulated.
You can't do what you want.
It can't be a family business.
And you can't, you know, all the sets of rules for shareholders now are are so onerous that CEOs are basically hired to pander to the business press and the world, which includes a whole lot of social justice talk that probably isn't good for the employees of the company or the shareholders.
So in just one second, I'm going to ask you one final question, but if you want to hear Amity Schlaes' answer, you have to be a Daily Wire subscriber to To subscribe, head on over to dailywire.com, click subscribe, and you can hear the end of our conversation there.
Amity Shlaes, the book is Great Society, New History.
Go check it out today.
Thanks so much for stopping by.
I really appreciate it.
Thank you.
Mike Joyner and produced by Mathis Glover.
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